Apr 21, 2019

Why Retailers Are Welcoming Competitors' Online Shopping Returns

Because retailers believe it will drive more foot traffic to stores, which may then cause an uptick in sales.

And brands like it because it may help flatten their soaring return and delivery costs. JL

Sarah Nassauer reports in the Wall Street Journal:

Walgreens Boots Alliance and Nordstromwill
let online shoppers at other brands and retailers pick up or return
orders at some stores, a sign of how retailers are partnering in new
ways to draw customers as more shopping shifts online.“The main thing is this will drive more footfall." (And) Brands hope adding more return and pickup locations will boost sales by
offering convenience and reduce the cost of shipping. Sending more items
in a single package or letting carriers like FedEx pick up more
packages at one location can lower shipping costs.Walgreens Boots Alliance and Nordstromwill let online shoppers at other brands and retailers pick up or return orders at some stores, a sign of how retailers are partnering in new ways to draw customers as more shopping shifts online.

Walgreens will start offering package pickup and returns at more than 8,000 U.S. locations to partners such as Levi Strauss LEVI 1.45% & Co. and Urban Outfitters Inc., URBN 0.98% which owns Anthropologie and other chains. Nordstrom will test doing the same at seven stores in the Los Angeles area with a group that includes Cole Haan, said the companies. To start, some brands will only allow package returns or pickup, but not both.
For example, when shoppers want to return a product purchased on Levi.com, they can choose to ship it to Levi, drop it off at a Levi store, or take it to a Walgreens store.
“The main thing is this will drive more footfall into Walgreens,” using the chain’s convenient locations as an asset, said Alex Gourlay, co-chief operating officer of Walgreens Boots Alliance.
The rise of Amazon.com Inc. and new shopper habits have prompted many brick-and-mortar retailers to reevaluate how they allocate space. Last year, Saks Fifth Avenue moved its beauty department from its traditional spot on the high-traffic first floor in some stores, rebuilding on the 2nd floor to provide more room to offer services and compete with rivals.
Chains are also forming partnerships that would have been unthinkable years ago, including carving out real estate for their competitors in the name of getting people in the door. Department store Kohl’s Corp. now allows returns from Amazon at about 100 stores.
The Walgreens and Nordstrom arrangement is being brokered by Narvar Inc., a software and technology company that manages order tracking and customer communication around online orders and returns for hundreds of brands, including Levi and Urban Outfitters. About a dozen Narvar clients have decided to offer some piece of the service to their online shoppers at either Walgreens or Nordstrom so far, Narvar Chief Executive Amit Sharma said.
Walgreens has struck about a dozen deals in recent years with companies, including grocer Kroger Corp. , Microsoft Corp. , and FedEx Corp. , in a bid to increase pharmacy revenue and use services to expand the business amid falling sales.
Walgreens is only offering Narvar’s new service in locations with a FedEx partnership where store workers are already trained to handle the flow of packages, said Mr. Gourlay.
Nordstrom also has experimented with new ways to use its department stores, offering temporary space to online brands like shoe seller Allbirds and opening a store that offers services like tailoring and manicures, but no clothes. With its latest test, Nordstrom is effectively helping brands like Cole Haan go around it to sell directly to shoppers online, hoping any downside will be offset by the people who visit its stores to make returns or pick up orders. “We are piloting this as another way to serve customers on their terms,” said a Nordstrom spokeswoman.
The industry is still grappling with how to navigate the logistic and competitive challenges these partnerships can bring.
Happy Returns, a Santa Monica, Calif.-based startup, manages returns for brands in part by creating a network of other retailers willing to accept those returns. A pilot program with 7-Eleven Inc. ended last year after some shoppers found store workers didn’t know how to process a return or said they were too busy to do so, said Happy Returns co-founder and CEO David Sobie.
Because turnover is high among convenience-store workers and they are usually managing several tasks at once, “it was hard for them to execute,” he said. The company has expanded with specialty retailers Paper Source, Sur La Table and others, he said.
A spokeswoman for 7-Eleven said the company is committed to testing new programs. The Happy Returns system was tested in fewer than 10 stores and the “process and technology did not work well with our store operations,” she said.
Through Narvar, Cole Haan will offer shoppers returns at Nordstrom, but not Walgreens, since the shoe seller already works with the department store, a Cole Haan spokeswoman said. Urban Outfitters, which also sells some of its clothing brands at Nordstrom, to start will offer online order pickup at Walgreens, not Nordstrom, in part because some see the department store as a more likely competitor, said people familiar with the plans.
For now Narvar won’t charge more for the service, Mr. Sharma said, offering it as part of its larger software services to clients.
Walgreens and Nordstrom will handle the cost of managing packages in hopes of bringing more shoppers to stores, according to the companies.
Brands hope adding more return and pickup locations will boost sales by offering convenience and reduce the cost of shipping. Sending more items in a single package or letting carriers like FedEx pick up more packages at one location can lower shipping costs.
“We take advantage of pooling and make some of the returns more efficient,” said Marc Rosen, Levi’s president of direct to consumer. And the deal adds 8,000 more drop points where shoppers can make a return, he said. “It’s allowing them to return our products at points they pass everyday.”

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As a Partner and Co-Founder of Predictiv and PredictivAsia, Jon specializes in management performance and organizational effectiveness for both domestic and international clients. He is an editor and author whose works include Invisible Advantage: How Intangilbles are Driving Business Performance.Learn more...